Hiring via employee referrals on the rise

Top players such as Coca-Cola, Infosys, Genpact, Capgemini, Deloitte, Jubilant and more are reporting that over 40% of their hires come through referrals.Varuni Khosla&Brinda Sarkar | ET Bureau | Updated: August 19, 2016, 09:57 IST

When Lenovo India decided to strengthen its diversity numbers, it decided to tap into its referral system. The company asked its employees to recommend candidates, and decided to reward those who successfully recommended more women for the same roles.

As employee referrals become an established method to hire quality lateral talent, companies are using technology platforms to build a steady talent pipeline through referrals.

A majority of companies (nearly 41%, according to one study) across India use top technology for referral hires. According to the study India Recruiting Trends 2016 conducted by LinkedIn Talent Solutions, employee referrals are on the rise. This year, referrals were the top source of quality hires. “Nearly 55% of talent leaders see employee referral programmes as the top source of quality hire," says Irfan Abdulla, director, talent solutions, LinkedIn India.

Top players such as Coca-Cola, Infosys, Genpact, Capgemini, Deloitte, Jubilant and more are reporting that over 40% of their hires come through referrals.

Today, technology major Infosys, for instance, has enhanced the use of technology for the employee referral process. It has created a portal where employees can view requirements and submit profiles of candidates directly. Employees can then track the status of their referral real-time.

Richard Lobo, senior vice president and head HR, Infosys, says a majority of their hiring now takes place through the referral route. "Employees can make a good referral decision as they understand the aspirations of the candidate they refer as well as the requirements and culture of the company,” he said.

More recruitment via referrals

The study adds that not only do talent leaders see employee referrals and social networks as top sources of quality hires, they also see them as long-lasting trends. About 41% say employee referrals are an essential and long-lasting trend. India scores 65% against the global average of 39% in hiring through referrals.

Financial services company Credit Suisse has an Employee Referral Programme (ERP), which allows it to tap into employees’ network and identify the people with the right expertise, knowledge and leadership skills. They use "career cafes" and "develop your career" sessions with a success rate of 1/3rd of the jobs posted.

Rewarding referrals

At Lenovo India, Rohit Sandal, who is the director of human resources, says a good deal of success has come out of using a referral system and rewarding employees who re commend more women for roles. "We provide a higher referral amount to those who successfully refer women. This has been instrumental in encouraging higher referrals of women candidates, thereby helping us strengthen our diversity numbers," he said.

Experts say skill life cycles are becoming shorter and people are hiring for 'attitude' and not just 'skillsets' and these tools help. "The best way to hire is basis attitude through a referral rather than just the skills of the potential employee. There is credibility. But referral hiring is great for replacement hiring and growth hiring," said Nilanjan Roy, head of strategy, TimesJobs.com.

He, however, says that the challenge remains in rewarding the relast-mile. "Recognition and rewarding of the entire chain rather than the last mile makes referral tools unsuccessful all over the world."

In another initiative, this month, Capgemini launched 'recruitHER' to raise the gender diversity quotient. Under this programme, employees who upload profiles of female candidates will be eligible for a lucky draw.

At beverage major Coca-Cola, 31% of associates are women and this has been because they place a 15-20% premium on female candidates successfully referred.

Tech tools and app ecosystems

Consultancy firm Deloitte has done 40-45% of its annual hiring through the referral method. Next, they are building an app to make their referral process completely streamlined and digital, so that someone who wants to refer a candidate can take less than a minute to do so. SV Nathan, partner and chief talent officer, Deloitte, says referrals are a great indicator of whether employees are happy with the work culture within an organisation.

"This number (40-45%) is a healthy percentage as opposed to the earlier 20% or thereabouts. We have made efforts to ramp up this number over the last 4-5 years," he said. Deloitte has draws for those who refer others.

“The giveaways aren't of very high value but rather things we think will find favour among the younger employees such as Kindles, external hard drives, etc. The new app to be launched in January will allow the HR department to track the process and receive feedback and acknowledgement,” said Nathan.

Another company, Geojit BNP Paribas, a retail financial services provider, uses a software called 'Workflow' which is a process automation of the employee referral scheme. It was developed by their internal technology team. At every milestone in any process, there is a possibility for meeting a decision making requirement / approval which on getting automated helps in faster processing.

Jubilant FoodWorks depend on referrals as a very successful method of bringing quality talent since it has a workforce of almost 30,000, of which 27,000 work in restaurants. Last year, they hired nearly 8,000 people for restaurants through referrals, and see this to be a steady trend going forward.

They are currently using a referral app called 'SkilledTree' on a pilot basis. This app -- which works on mobile -- crawls through one's social media networks and sends out messages on the company's behalf. “We have received over 200 applications through this app and are in the process of conducting interviews. Depending on the success of this programme, we will make it permanent,” said Biplob Banerjee, executive vice president - HR and CSR.

At Coca Cola India, over the last three years, at least 40% of the candidates hired have been through referrals. Right now, an internet-based application lets employees refer friends, family and associates. Soon, this will be replaced by a global mobile-based app to bring in an infusion of next-generation technology by the middle of next year.

“The app will allow referring employees to have more clarity on the process, interact better with the system, and have the ease of logging in through any device,” said Sameer Wadhawan, VP of human resources, Coca Cola India and South West Asia.

Tracking through technology

At Genpact, the company will look at a more scientific approach to referrals. They want to track exactly how many people are participating in their referral programme and use that data for broad-based trends.